DUBAI: DP World, one of the world’s largest port operators, has signed a $3bn loan deal, becoming the latest Dubai entity to take advantage of buoyant funding conditions to improve terms on its debt.
The new five-year facility is split between a $2.39bn conventional loan and a $610m Shariah-compliant tranche, according to two sources aware of the matter, who spoke on condition of anonymity as the information isn’t public.
A spokeswoman for DP World referred to an April 24 statement, in which the company said it undertakes a regular annual review of its banking facilities as part of active financial management. She declined to comment further.
The new deal, which was signed on June 30 according to the sources, replaces an existing $1bn deal that was due to mature in 2018 and had already been renegotiated once to add a year to the lifespan. DP World began talks with banks earlier this year to triple the size and extend the lifespan of the existing deal, as well as to reduce the interest rate, sources said in April.
The new transaction pays 150 basis points over the London interbank offered rate (Libor), down from 225 bps over the same benchmark for the existing deal.
DP World is the latest Dubai-based entity to negotiate better terms for its borrowing, taking advantage of improved sentiment towards the emirate among foreign banks and the high amount of cash in the local banking system which banks are looking to utilise.
Borrowing costs jumped in the wake of multi-billion-dollar debt restructurings at Dubai’s government-related companies at the start of this decade, but they have now come down as the local economy has rebounded. Reuters
